Orrstown Financial Services, Inc. Reports Second Quarter 2024 Results and Increases Quarterly Dividend by $0.03 per Share
Orrstown Financial Services reported Q2 2024 results with a net income of $7.7 million and diluted EPS of $0.73, down from $8.5 million and $0.81 in Q1 2024. Excluding $1 million in merger-related expenses, net income and EPS were $8.7 million and $0.83, respectively. The net interest margin fell to 3.54% from 3.77% in Q1 2024. Nonaccrual loans dropped to $8.4 million from $12.9 million in Q1 2024. Non-interest income increased to $7.2 million from $6.6 million in Q1 2024, while non-interest expenses grew slightly to $22.6 million. The company declared a dividend increase of $0.03 per share, payable on August 15, 2024.
Orrstown Financial Services ha riportato i risultati del Q2 2024, con un utile netto di 7,7 milioni di dollari e un EPS diluito di 0,73 dollari, in calo rispetto agli 8,5 milioni di dollari e 0,81 dollari del Q1 2024. Escludendo 1 milione di dollari di spese legate alla fusione, l'utile netto e l'EPS sono stati rispettivamente di 8,7 milioni di dollari e 0,83 dollari. Il margine di interesse netto è sceso al 3,54% dal 3,77% del Q1 2024. I prestiti non in stato di pagamento sono diminuiti a 8,4 milioni di dollari rispetto ai 12,9 milioni del Q1 2024. Il reddito non da interessi è aumentato a 7,2 milioni di dollari rispetto ai 6,6 milioni del Q1 2024, mentre le spese non da interessi sono leggermente aumentate a 22,6 milioni di dollari. La società ha dichiarato un aumento del dividendo di 0,03 dollari per azione, pagabile il 15 agosto 2024.
Orrstown Financial Services informó los resultados del Q2 2024 con un ingreso neto de 7.7 millones de dólares y un EPS diluido de 0.73, disminuyendo desde los 8.5 millones y 0.81 en el Q1 2024. Excluyendo 1 millón de dólares en gastos relacionados con la fusión, el ingreso neto y el EPS fueron de 8.7 millones y 0.83, respectivamente. El margen de interés neto cayó al 3.54% desde el 3.77% en el Q1 2024. Los préstamos en estado de incobrabilidad se redujeron a 8.4 millones desde los 12.9 millones en el Q1 2024. El ingreso no relacionado con intereses aumentó a 7.2 millones desde los 6.6 millones en el Q1 2024, mientras que los gastos no relacionados con intereses crecieron ligeramente a 22.6 millones. La empresa declaró un aumento del dividendo de 0.03 por acción, pagadero el 15 de agosto de 2024.
Orrstown Financial Services는 2024년 2분기 결과를 발표하며 순이익이 770만 달러, 희석 주당순이익이 0.73달러로, 2024년 1분기의 850만 달러와 0.81달러에서 감소했다고 밝혔습니다. 합병 관련 비용 100만 달러를 제외할 경우, 순이익 및 EPS는 각각 870만 달러와 0.83달러로 나타났습니다. 순이자 마진은 2024년 1분기의 3.77%에서 3.54%로 떨어졌습니다. 연체 대출은 2024년 1분기의 1290만 달러에서 840만 달러로 줄어들었습니다. 비이자 수익은 2024년 1분기의 660만 달러에서 720만 달러로 증가했으며, 비이자 비용은 약간 증가해 2260만 달러에 이르렀습니다. 회사는 배당금 인상을 주당 0.03달러로 선언하며, 2024년 8월 15일에 지급될 예정입니다.
Orrstown Financial Services a annoncé les résultats du T2 2024, avec un bénéfice net de 7,7 millions de dollars et un BAE dilué de 0,73 dollar, en baisse par rapport à 8,5 millions de dollars et 0,81 dollar au T1 2024. En excluant 1 million de dollars de frais liés à la fusion, le bénéfice net et le BAE étaient respectivement de 8,7 millions de dollars et 0,83 dollar. La marge d'intérêt nette a chuté à 3,54% contre 3,77% au T1 2024. Les prêts non recouvrables ont diminué à 8,4 millions de dollars contre 12,9 millions de dollars au T1 2024. Les revenus non liés aux intérêts ont augmenté à 7,2 millions de dollars contre 6,6 millions de dollars au T1 2024, tandis que les dépenses non liées aux intérêts ont légèrement augmenté à 22,6 millions de dollars. La société a déclaré une augmentation de dividende de 0,03 dollar par action, payable le 15 août 2024.
Orrstown Financial Services berichtete über die Ergebnisse des 2. Quartals 2024 mit einem Nettoergebnis von 7,7 Millionen US-Dollar und einem verwässerten EPS von 0,73, was einem Rückgang von 8,5 Millionen und 0,81 im 1. Quartal 2024 entspricht. Ohne 1 Million US-Dollar an fusionsbedingten Ausgaben betrugen das Nettoergebnis und das EPS 8,7 Millionen US-Dollar und 0,83. Die Nettozinsspanne fiel auf 3,54% gegenüber 3,77% im 1. Quartal 2024. Die notleidenden Kredite sanken von 12,9 Millionen US-Dollar im 1. Quartal 2024 auf 8,4 Millionen US-Dollar. Die nebeneinkommensquellen stiegen von 6,6 Millionen US-Dollar im 1. Quartal 2024 auf 7,2 Millionen US-Dollar, während die nicht zinstragenden Aufwendungen leicht auf 22,6 Millionen US-Dollar anstiegen. Das Unternehmen erklärte eine Dividendensteigerung von 0,03 US-Dollar pro Aktie, zahlbar am 15. August 2024.
- Dividend increased by 15% to $0.23 per share.
- Non-interest income rose to $7.2 million from $6.6 million.
- Nonaccrual loans decreased to $8.4 million, improving asset quality.
- Tangible book value per common share increased to $24.08.
- Net income decreased to $7.7 million from $8.5 million in Q1 2024.
- Diluted EPS fell to $0.73 from $0.81 in Q1 2024.
- Net interest margin declined to 3.54% from 3.77%.
Insights
The recent quarterly results of Orrstown Financial Services, Inc. offer a mixed bag of insights for investors. While the company reported a sequential decline in net income and earnings per share, a deeper dive reveals a few positive nuances. Excluding merger-related costs, the adjusted figures indicate a relatively stable performance. The completion of the merger with Codorus Valley Bancorp is a noteworthy event, expected to bring long-term synergies and scale advantages.
Moreover, key metrics like the net interest margin and return on average equity have seen some pressures, but these can be attributed to temporary factors such as interest income from the payoff of a nonaccrual loan in Q1. Importantly, the decrease in nonaccrual loans and the rise in tangible book value per share bode well for the company's financial health and should be viewed positively by investors focused on asset quality and intrinsic value.
Another highlight is the 15% increase in the quarterly dividend, reflecting management's confidence in future cash flows and commitment to returning value to shareholders. However, the slight downturn in return on average equity and net interest margin due to higher funding costs warrants cautious optimism as these are areas to be closely monitored in future quarters.
The market reaction to the reported results of Orrstown Financial Services, Inc. will likely be mixed. Investors may find the lowered net income and earnings per share concerning at first glance. However, the qualitative aspects should not be overlooked. The merger with Codorus Valley Bancorp is a significant development that alters the company’s future growth trajectory. While integration costs are expected to persist in the short term, the long-term potential for increased profitability and market share is promising.
Additionally, an increase in non-interest income, particularly from wealth management and swap fees, highlights diversified revenue streams, which are critical in the volatile interest rate environment. The uptick in deposits and the stable loan-to-deposit ratio also suggest a strong liquidity position, essential for supporting growth and meeting client needs. Investors should focus on these foundational strengths and growth potentials rather than the quarterly fluctuations.
The merger of Orrstown Financial Services with Codorus Valley Bancorp stands out as a pivotal move in the banking sector. Historically, mergers of equals often lead to significant operational efficiencies and cost savings, although they come with initial integration challenges and expenses. The reported expenses linked to the merger are a short-term pain for a potential long-term gain.
From an operational standpoint, the decline in nonaccrual loans and the overall improvement in asset quality metrics should be reassuring to investors. The company's strategy to grow its commercial and residential loan portfolios while maintaining credit quality reflects prudent risk management. Furthermore, the commitment to increased dividends is a direct benefit to shareholders, signaling robust capital management.
However, it's essential for investors to remain cautious of the integration process's complexities and the economic conditions that could impact the banking sector broadly. The balance between growth, cost management and maintaining robust credit quality will be key areas to watch in the coming quarters.
- Orrstown Financial Services, Inc. ("Orrstown" or the “Company”) closed the merger of equals transaction with Codorus Valley Bancorp, Inc. ("Codorus") on July 1, 2024; as a result, the second quarter results reported in this release reflect Orrstown's standalone operating results and do not reflect the combined operating results of the two companies;
- Net income of
$7.7 million and diluted earnings per share of$0.73 for the three months ended June 30, 2024 compared to net income of$8.5 million and diluted earnings per share of$0.81 for the three months ended March 31, 2024; - Excluding the impact of
$1.0 million in expenses related to the merger, net of taxes, net income and diluted earnings per share, respectively, were$8.7 million (1) and$0.83 (1) for the second quarter of 2024 compared to net income and diluted earnings per share of$9.2 million (1) and$0.88 (1), respectively, as adjusted for the impact of$0.7 million in merger-related expenses, net of taxes, recorded for the first quarter of 2024; - Net interest margin, on a tax equivalent basis, was
3.54% in the second quarter of 2024 compared to3.77% in the first quarter of 2024; during the three months ended March 31, 2024, Orrstown Bank (the "Bank") recognized interest income previously applied to principal of$1.6 million from the payoff of a nonaccrual loan, which positively impacted net interest margin for the first quarter of 2024 by 21 basis points; excluding the impact of the payoff, net interest margin for the first quarter of 2024 would have been3.56% ; - Return on average equity for the three months ended June 30, 2024 was
11.41% compared to12.79% for the three months ended March 31, 2024; excluding the aforementioned merger-related expenses, return on average equity was12.88% (1) for the three months ended June 30, 2024 compared to13.79% (1) for the three months ended March 31, 2024; - At June 30, 2024, nonaccrual loans totaled
$8.4 million , a decrease of$4.5 million , from$12.9 million at March 31, 2024 and a decrease of$17.1 million from December 31, 2023; nonaccrual loans to total loans declined to0.36% at June 30, 2024 compared to0.56% at March 31, 2024 and1.11% at December 31, 2023; - Non-interest income increased by
$0.6 million to$7.2 million for the three months ended June 30, 2024 from$6.6 million for the three months ended March 31, 2024; - Tangible book value per common share(1) rose to
$24.08 per share at June 30, 2024 compared to$23.47 per share at March 31, 2024; - The Board of Directors declared a cash dividend of
$0.23 per common share, payable August 15, 2024, to shareholders of record as of August 8, 2024; this represents an increase in the Company's quarterly cash dividend of$0.03 per share, or15% .
HARRISBURG, Pa., July 23, 2024 (GLOBE NEWSWIRE) -- Orrstown Financial Services, Inc. (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended June 30, 2024. Net income totaled
(1) Non-GAAP measure. See Appendix A for additional information.
"The closing of the merger of equals with Codorus Valley Bancorp represents a significant milestone in the history of the Company. The merger will significantly increase the combined company's size and scale, which we believe will drive profitability and shareholder value. We are already making progress on the cost savings and integration consistent with the previously announced timeline to achieve these benefits," commented Thomas R. Quinn, Jr., President and Chief Executive Officer.
"We are proud of our second quarter results, highlighted by robust earnings, stabilizing net interest margin, solid loan growth, strong fee income and an increase in our quarterly cash dividend. We are excited to move forward as one unified organization, leveraging our combined strengths to deliver even greater value to our shareholders, clients, communities and employees," Mr. Quinn added.
DISCUSSION OF RESULTS
Balance Sheet
Loans
Loans held for investment increased by
Investment Securities
Investment securities, all of which are classified as available-for-sale, increased by
Deposits
During the second quarter of 2024, deposits increased by
Borrowings
The Bank actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings were
Income Statement
Net Interest Income and Margin
Net interest income was
Interest income on loans, on a tax equivalent basis, decreased by
Interest income on investment securities, on a tax equivalent basis, was
Interest expense, on a tax equivalent basis, increased by
Provision for Credit Losses
The Company recorded a provision for credit losses of
Special mention loans decreased by
Management regularly analyzes the commercial real estate portfolio, which includes the review of occupancy, cash flows, expenses and expiring leases, as well as the location of the real estate. At June 30, 2024, the Company had
Noninterest Income
Noninterest income increased by
Wealth management income increased by
During the second quarter of 2024, the Company recorded swap fee income of
For the three months ended June 30, 2024, mortgage banking income decreased by
Noninterest Expenses
Noninterest expenses increased by
For the three months ended June 30, 2024, merger-related expenses totaled
Advertising and bank promotions expense increased by
Salaries and benefits expense decreased by
Income Taxes
The Company's effective tax rate for the second quarter of 2024 was
Capital
Shareholders’ equity totaled
Tangible book value per share(1) increased to
The Company's tangible common equity ratio increased to
Selected Financial Information of Codorus Valley Bancorp, Inc. (unaudited)
- As of June 30, 2024, Codorus had total assets of
$2.2 billion , total loans of$1.7 billion and total deposits of$1.9 billion ; - Net income for the three months ended June 30, 2024, excluding
$9.6 million of merger-related expenses, was$5.5 million ; net income for the six months ended June 30, 2024, excluding$9.8 million of merger-related expenses, was$9.8 million ; - Net interest margin for the three and six months ended June 30, 2024 was
3.28% and3.34% , respectively; - Non-performing loans totaled
$8.9 million and classified loans were$45.5 million at June 30, 2024.
(1) Non-GAAP measure. See Appendix A for additional information.
Investor Relations Contact: |
Neelesh Kalani |
Executive Vice President, Chief Financial Officer |
Phone (717) 510-7097 |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||
FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||
(Dollars in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
Profitability for the period: | |||||||||||||||
Net interest income | $ | 26,103 | $ | 26,375 | $ | 52,984 | $ | 52,669 | |||||||
Provision for credit losses | 812 | 399 | 1,110 | 1,128 | |||||||||||
Noninterest income | 7,172 | 7,158 | 13,802 | 13,236 | |||||||||||
Noninterest expenses | 22,639 | 20,749 | 45,108 | 41,004 | |||||||||||
Income before income tax expense | 9,824 | 12,385 | 20,568 | 23,773 | |||||||||||
Income tax expense | 2,086 | 2,547 | 4,299 | 4,779 | |||||||||||
Net income available to common shareholders | $ | 7,738 | $ | 9,838 | $ | 16,269 | $ | 18,994 | |||||||
Financial ratios: | |||||||||||||||
Return on average assets(1) | 0.97 | % | 1.32 | % | 1.04 | % | 1.29 | % | |||||||
Return on average assets, adjusted(1) (2) (3) | 1.09 | % | 1.32 | % | 1.14 | % | 1.29 | % | |||||||
Return on average equity(1) | 11.41 | % | 16.27 | % | 12.09 | % | 16.08 | % | |||||||
Return on average equity, adjusted(1) (2) (3) | 12.88 | % | 16.27 | % | 13.33 | % | 16.08 | % | |||||||
Net interest margin(1) | 3.54 | % | 3.83 | % | 3.65 | % | 3.88 | % | |||||||
Efficiency ratio | 68.0 | % | 61.9 | % | 67.5 | % | 62.2 | % | |||||||
Efficiency ratio, adjusted(2) (3) | 64.6 | % | 61.9 | % | 64.8 | % | 62.2 | % | |||||||
Income per common share: | |||||||||||||||
Basic | $ | 0.74 | $ | 0.95 | $ | 1.57 | $ | 1.83 | |||||||
Basic, adjusted(2) (3) | $ | 0.84 | $ | 0.95 | $ | 1.73 | $ | 1.83 | |||||||
Diluted | $ | 0.73 | $ | 0.94 | $ | 1.55 | $ | 1.82 | |||||||
Diluted, adjusted(2) (3) | $ | 0.83 | $ | 0.94 | $ | 1.71 | $ | 1.82 | |||||||
Average equity to average assets | 8.50 | % | 8.11 | % | 8.58 | % | 8.04 | % | |||||||
(1)Annualized for the three and six months ended June 30, 2024 and 2023 | |||||||||||||||
(2)Ratio for the three and six months ended June 30, 2024 has been adjusted for merger-related expenses. | |||||||||||||||
(3)Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||
FINANCIAL HIGHLIGHTS (Unaudited) | |||||||
(continued) | |||||||
June 30, | December 31, | ||||||
(Dollars in thousands, except per share amounts) | 2024 | 2023 | |||||
At period-end: | |||||||
Total assets | $ | 3,198,782 | $ | 3,064,240 | |||
Loans, net of allowance for credit losses | 2,317,739 | 2,269,611 | |||||
Loans held-for-sale, at fair value | 1,562 | 5,816 | |||||
Securities available for sale, at fair value | 529,082 | 513,519 | |||||
Total deposits | 2,702,884 | 2,558,814 | |||||
Borrowings | 129,625 | 147,285 | |||||
Subordinated notes | 32,128 | 32,093 | |||||
Shareholders' equity | 278,376 | 265,056 | |||||
Credit quality and capital ratios(1): | |||||||
Allowance for credit losses to total loans | 1.27 | % | 1.25 | % | |||
Total nonaccrual loans to total loans | 0.36 | % | 1.11 | % | |||
Nonperforming assets to total assets | 0.26 | % | 0.83 | % | |||
Allowance for credit losses to nonaccrual loans | 357 | % | 112 | % | |||
Total risk-based capital: | |||||||
Orrstown Financial Services, Inc. | 13.3 | % | 13.0 | % | |||
Orrstown Bank | 13.1 | % | 12.8 | % | |||
Tier 1 risk-based capital: | |||||||
Orrstown Financial Services, Inc. | 11.1 | % | 10.8 | % | |||
Orrstown Bank | 12.0 | % | 11.6 | % | |||
Tier 1 common equity risk-based capital: | |||||||
Orrstown Financial Services, Inc. | 11.1 | % | 10.8 | % | |||
Orrstown Bank | 12.0 | % | 11.6 | % | |||
Tier 1 leverage capital: | |||||||
Orrstown Financial Services, Inc. | 8.9 | % | 8.9 | % | |||
Orrstown Bank | 9.5 | % | 9.5 | % | |||
Book value per common share | $ | 25.97 | $ | 24.98 | |||
(1)Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the CECL standard. |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||
CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
(Dollars in thousands, except per share amounts) | June 30, 2024 | December 31, 2023 | |||||
Assets | |||||||
Cash and due from banks | $ | 35,951 | $ | 32,586 | |||
Interest-bearing deposits with banks | 96,558 | 32,575 | |||||
Cash and cash equivalents | 132,509 | 65,161 | |||||
Restricted investments in bank stocks | 11,147 | 11,992 | |||||
Securities available for sale (amortized cost of | 529,082 | 513,519 | |||||
Loans held for sale, at fair value | 1,562 | 5,816 | |||||
Loans | 2,347,603 | 2,298,313 | |||||
Less: Allowance for credit losses | (29,864 | ) | (28,702 | ) | |||
Net loans | 2,317,739 | 2,269,611 | |||||
Premises and equipment, net | 28,484 | 29,393 | |||||
Cash surrender value of life insurance | 74,119 | 73,204 | |||||
Goodwill | 18,724 | 18,724 | |||||
Other intangible assets, net | 1,974 | 2,414 | |||||
Accrued interest receivable | 14,120 | 13,630 | |||||
Deferred tax assets, net | 21,674 | 22,017 | |||||
Other assets | 47,648 | 38,759 | |||||
Total assets | $ | 3,198,782 | $ | 3,064,240 | |||
Liabilities | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | 425,255 | $ | 430,959 | |||
Interest-bearing | 2,277,629 | 2,127,855 | |||||
Total deposits | 2,702,884 | 2,558,814 | |||||
Securities sold under agreements to repurchase and federal funds purchased | 14,625 | 9,785 | |||||
FHLB advances and other borrowings | 115,000 | 137,500 | |||||
Subordinated notes | 32,128 | 32,093 | |||||
Accrued interest and other liabilities | 55,769 | 60,992 | |||||
Total liabilities | 2,920,406 | 2,799,184 | |||||
Shareholders’ Equity | |||||||
Preferred stock, | — | — | |||||
Common stock, no par value— | 583 | 583 | |||||
Additional paid—in capital | 187,694 | 189,027 | |||||
Retained earnings | 129,670 | 117,667 | |||||
Accumulated other comprehensive losses | (28,404 | ) | (28,476 | ) | |||
Treasury stock— 481,044 and 592,209 shares, at cost at June 30, 2024 and December 31, 2023, respectively | (11,167 | ) | (13,745 | ) | |||
Total shareholders’ equity | 278,376 | 265,056 | |||||
Total liabilities and shareholders’ equity | $ | 3,198,782 | $ | 3,064,240 |
ORRSTOWN FINANCIAL SERVICES, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
(In thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Interest income | ||||||||||||||||
Loans | $ | 35,537 | $ | 31,203 | $ | 71,770 | $ | 59,947 | ||||||||
Investment securities - taxable | 4,999 | 4,415 | 9,583 | 8,785 | ||||||||||||
Investment securities - tax-exempt | 881 | 865 | 1,758 | 1,730 | ||||||||||||
Short-term investments | 1,864 | 418 | 2,820 | 716 | ||||||||||||
Total interest income | 43,281 | 36,901 | 85,931 | 71,178 | ||||||||||||
Interest expense | ||||||||||||||||
Deposits | 15,265 | 8,608 | 28,781 | 14,810 | ||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 27 | 28 | 52 | 53 | ||||||||||||
FHLB advances and other borrowings | 1,152 | 1,386 | 2,626 | 2,638 | ||||||||||||
Subordinated notes | 734 | 504 | 1,488 | 1,008 | ||||||||||||
Total interest expense | 17,178 | 10,526 | 32,947 | 18,509 | ||||||||||||
Net interest income | 26,103 | 26,375 | 52,984 | 52,669 | ||||||||||||
Provision for credit losses | 812 | 399 | 1,110 | 1,128 | ||||||||||||
Net interest income after provision for credit losses | 25,291 | 25,976 | 51,874 | 51,541 | ||||||||||||
Noninterest income | ||||||||||||||||
Service charges | 1,283 | 1,251 | 2,483 | 2,408 | ||||||||||||
Interchange income | 961 | 993 | 1,872 | 1,958 | ||||||||||||
Swap fee income | 375 | 196 | 574 | 196 | ||||||||||||
Wealth management income | 3,312 | 2,822 | 6,414 | 5,569 | ||||||||||||
Mortgage banking activities | 369 | 112 | 827 | 590 | ||||||||||||
Investment securities losses | (12 | ) | (2 | ) | (17 | ) | (10 | ) | ||||||||
Other income | 884 | 1,786 | 1,649 | 2,525 | ||||||||||||
Total noninterest income | 7,172 | 7,158 | 13,802 | 13,236 | ||||||||||||
Noninterest expenses | ||||||||||||||||
Salaries and employee benefits | 13,195 | 13,054 | 26,947 | 25,250 | ||||||||||||
Occupancy, furniture and equipment | 2,705 | 2,266 | 5,344 | 4,599 | ||||||||||||
Data processing | 1,237 | 1,201 | 2,502 | 2,418 | ||||||||||||
Advertising and bank promotions | 774 | 919 | 1,172 | 1,324 | ||||||||||||
FDIC insurance | 419 | 519 | 860 | 1,023 | ||||||||||||
Professional services | 801 | 504 | 1,432 | 1,238 | ||||||||||||
Taxes other than income | 49 | 3 | 543 | 460 | ||||||||||||
Intangible asset amortization | 215 | 239 | 440 | 489 | ||||||||||||
Merger-related expenses | 1,135 | — | 1,807 | — | ||||||||||||
Other operating expenses | 2,109 | 2,044 | 4,061 | 4,203 | ||||||||||||
Total noninterest expenses | 22,639 | 20,749 | 45,108 | 41,004 | ||||||||||||
Income before income tax expense | 9,824 | 12,385 | 20,568 | 23,773 | ||||||||||||
Income tax expense | 2,086 | 2,547 | 4,299 | 4,779 | ||||||||||||
Net income | $ | 7,738 | $ | 9,838 | $ | 16,269 | $ | 18,994 | ||||||||
continued | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Share information: | ||||||||||||||||
Basic earnings per share | $ | 0.74 | $ | 0.95 | $ | 1.57 | $ | 1.83 | ||||||||
Diluted earnings per share | $ | 0.73 | $ | 0.94 | $ | 1.55 | $ | 1.82 | ||||||||
Dividends paid per share | $ | 0.20 | $ | 0.20 | $ | 0.40 | $ | 0.40 | ||||||||
Weighted average shares - basic | 10,393 | 10,336 | 10,371 | 10,360 | ||||||||||||
Weighted average shares - diluted | 10,553 | 10,421 | 10,517 | 10,458 |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||||||||||||||||||||||||||||||||
ANALYSIS OF NET INTEREST INCOME | |||||||||||||||||||||||||||||||||||||||||||||||||
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
6/30/2024 | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | |||||||||||||||||||||||||||||||||||||||||||||
Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | Taxable- | ||||||||||||||||||||||||||||||||||||||||
Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold & interest-bearing bank balances | $ | 142,868 | $ | 1,864 | 5.25 | % | $ | 74,523 | $ | 956 | 5.16 | % | $ | 37,873 | $ | 460 | 4.82 | % | $ | 57,778 | $ | 633 | 4.35 | % | $ | 37,895 | $ | 418 | 4.42 | % | |||||||||||||||||||
Investment securities(1)(2) | 538,451 | 6,114 | 4.54 | 519,851 | 5,694 | 4.39 | 508,891 | 5,890 | 4.63 | 521,234 | 5,548 | 4.26 | 526,225 | 5,510 | 4.19 | ||||||||||||||||||||||||||||||||||
Loans(1)(3)(4)(5) | 2,324,942 | 35,690 | 6.17 | 2,308,103 | 36,382 | 6.34 | 2,286,678 | 34,055 | 5.91 | 2,256,727 | 32,878 | 5.78 | 2,233,312 | 31,329 | 5.63 | ||||||||||||||||||||||||||||||||||
Total interest-earning assets | 3,006,261 | 43,668 | 5.84 | 2,902,477 | 43,032 | 5.96 | 2,833,442 | 40,405 | 5.67 | 2,835,739 | 39,059 | 5.47 | 2,797,432 | 37,257 | 5.34 | ||||||||||||||||||||||||||||||||||
Other assets | 204,863 | 196,295 | 204,382 | 200,447 | 191,983 | ||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 3,211,124 | $ | 3,098,772 | $ | 3,037,824 | $ | 3,036,186 | $ | 2,989,415 | |||||||||||||||||||||||||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,649,753 | 10,118 | 2.47 | $ | 1,570,622 | 9,192 | 2.35 | $ | 1,543,575 | 8,333 | 2.14 | $ | 1,541,728 | 7,476 | 1.92 | $ | 1,511,468 | 6,273 | 1.66 | |||||||||||||||||||||||||||||
Savings deposits | 165,467 | 140 | 0.34 | 170,005 | 144 | 0.34 | 178,351 | 153 | 0.34 | 190,817 | 164 | 0.34 | 204,584 | 135 | 0.26 | ||||||||||||||||||||||||||||||||||
Time deposits | 481,721 | 5,007 | 4.18 | 428,443 | 4,180 | 3.92 | 392,085 | 3,632 | 3.67 | 357,194 | 2,942 | 3.27 | 326,034 | 2,200 | 2.71 | ||||||||||||||||||||||||||||||||||
Total interest-bearing deposits | 2,296,941 | 15,265 | 2.67 | 2,169,070 | 13,516 | 2.51 | 2,114,011 | 12,118 | 2.27 | 2,089,739 | 10,582 | 2.01 | 2,042,086 | 8,608 | 1.69 | ||||||||||||||||||||||||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 13,412 | 27 | 0.81 | 12,010 | 25 | 0.85 | 13,874 | 30 | 0.85 | 15,006 | 31 | 0.83 | 13,685 | 28 | 0.82 | ||||||||||||||||||||||||||||||||||
FHLB advances and other borrowings | 115,000 | 1,152 | 4.03 | 137,505 | 1,474 | 4.31 | 127,843 | 1,358 | 4.21 | 128,131 | 1,354 | 4.19 | 132,094 | 1,386 | 4.21 | ||||||||||||||||||||||||||||||||||
Subordinated notes | 32,118 | 734 | 9.19 | 32,100 | 754 | 9.45 | 32,083 | 504 | 6.29 | 32,066 | 505 | 6.29 | 32,049 | 504 | 6.29 | ||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 2,457,471 | 17,178 | 2.81 | 2,350,685 | 15,769 | 2.70 | 2,287,811 | 14,010 | 2.43 | 2,264,942 | 12,472 | 2.19 | 2,219,914 | 10,526 | 1.90 | ||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 423,037 | 417,469 | 441,695 | 468,628 | 476,123 | ||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 57,828 | 62,329 | 59,876 | 54,353 | 50,851 | ||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 2,938,336 | 2,830,483 | 2,789,382 | 2,787,923 | 2,746,888 | ||||||||||||||||||||||||||||||||||||||||||||
Shareholders' equity | 272,788 | 268,289 | 248,442 | 248,263 | 242,527 | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,211,124 | $ | 3,098,772 | $ | 3,037,824 | $ | 3,036,186 | $ | 2,989,415 | |||||||||||||||||||||||||||||||||||||||
Taxable-equivalent net interest income / net interest spread | 26,490 | 3.02 | % | 27,263 | 3.26 | % | 26,395 | 3.24 | % | 26,587 | 3.29 | % | 26,731 | 3.44 | % | ||||||||||||||||||||||||||||||||||
Taxable-equivalent net interest margin | 3.54 | % | 3.77 | % | 3.71 | % | 3.73 | % | 3.83 | % | |||||||||||||||||||||||||||||||||||||||
Taxable-equivalent adjustment | (387 | ) | (382 | ) | (377 | ) | (368 | ) | (356 | ) | |||||||||||||||||||||||||||||||||||||||
Net interest income | $ | 26,103 | $ | 26,881 | $ | 26,018 | $ | 26,219 | $ | 26,375 | |||||||||||||||||||||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 122 | % | 123 | % | 124 | % | 125 | % | 126 | % | |||||||||||||||||||||||||||||||||||||||
NOTES: | |||||||||||||||||||||||||||||||||||||||||||||||||
(1)Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a | |||||||||||||||||||||||||||||||||||||||||||||||||
(2)Average balance of investment securities is computed at fair value. | |||||||||||||||||||||||||||||||||||||||||||||||||
(3)Average balances include nonaccrual loans. | |||||||||||||||||||||||||||||||||||||||||||||||||
(4)Interest income on loans includes prepayment and late fees, where applicable. | |||||||||||||||||||||||||||||||||||||||||||||||||
(5)Interest income on loans includes interest recovered of |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||
ANALYSIS OF NET INTEREST INCOME | |||||||||||||||||||
Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited) | |||||||||||||||||||
(continued) | |||||||||||||||||||
Six Months Ended | |||||||||||||||||||
June 30, 2024 | June 30, 2023 | ||||||||||||||||||
Taxable- | Taxable- | Taxable- | Taxable- | ||||||||||||||||
Average | Equivalent | Equivalent | Average | Equivalent | Equivalent | ||||||||||||||
(Dollars in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||
Assets | |||||||||||||||||||
Federal funds sold & interest-bearing bank balances | $ | 108,695 | $ | 2,820 | 5.22 | % | $ | 33,770 | $ | 716 | 4.27 | % | |||||||
Investment securities(1)(2) | 529,151 | 11,808 | 4.47 | 525,957 | 10,975 | 4.19 | |||||||||||||
Loans(1)(3)(4)(5) | 2,316,522 | 72,072 | 6.25 | 2,206,914 | 60,173 | 5.49 | |||||||||||||
Total interest-earning assets | 2,954,368 | 86,700 | 5.90 | 2,766,641 | 71,864 | 5.23 | |||||||||||||
Other assets | 200,580 | 194,786 | |||||||||||||||||
Total assets | $ | 3,154,948 | $ | 2,961,427 | |||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||
Interest-bearing demand deposits | $ | 1,610,188 | 19,310 | 2.41 | $ | 1,507,467 | 11,135 | 1.49 | |||||||||||
Savings deposits | 167,736 | 284 | 0.34 | 211,955 | 268 | 0.25 | |||||||||||||
Time deposits | 455,082 | 9,187 | 4.06 | 301,095 | 3,407 | 2.28 | |||||||||||||
Total interest-bearing deposits | 2,233,006 | 28,781 | 2.59 | 2,020,517 | 14,810 | 1.48 | |||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 12,711 | 52 | 0.83 | 13,776 | 53 | 0.77 | |||||||||||||
FHLB advances and other borrowings | 126,253 | 2,626 | 4.18 | 119,335 | 2,638 | 4.46 | |||||||||||||
Subordinated notes | 32,109 | 1,488 | 9.32 | 32,041 | 1,008 | 6.29 | |||||||||||||
Total interest-bearing liabilities | 2,404,079 | 32,947 | 2.76 | 2,185,669 | 18,509 | 1.71 | |||||||||||||
Noninterest-bearing demand deposits | 420,253 | 485,789 | |||||||||||||||||
Other liabilities | 60,078 | 51,736 | |||||||||||||||||
Total liabilities | 2,884,410 | 2,723,194 | |||||||||||||||||
Shareholders' equity | 270,538 | 238,233 | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 3,154,948 | $ | 2,961,427 | |||||||||||||||
Taxable-equivalent net interest income / net interest spread | 53,753 | 3.14 | % | 53,355 | 3.52 | % | |||||||||||||
Taxable-equivalent net interest margin | 3.65 | % | 3.88 | % | |||||||||||||||
Taxable-equivalent adjustment | (769 | ) | (686 | ) | |||||||||||||||
Net interest income | $ | 52,984 | $ | 52,669 | |||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 123 | % | 127 | % | |||||||||||||||
NOTES TO ANALYSIS OF NET INTEREST INCOME: | ||||||||
(1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a | ||||||||
(2) Average balance of investment securities is computed at fair value. | ||||||||
(3) Average balances include nonaccrual loans. | ||||||||
(4) Interest income on loans includes prepayment and late fees, where applicable. | ||||||||
(5) Interest income on loans includes interest recovered of | ||||||||
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||||||||||
(In thousands) | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | ||||||||||||||
Profitability for the quarter: | |||||||||||||||||||
Net interest income | $ | 26,103 | $ | 26,881 | $ | 26,018 | $ | 26,219 | $ | 26,375 | |||||||||
Provision for credit losses | 812 | 298 | 418 | 136 | 399 | ||||||||||||||
Noninterest income | 7,172 | 6,630 | 6,491 | 5,925 | 7,158 | ||||||||||||||
Noninterest expenses | 22,639 | 22,469 | 22,392 | 20,447 | 20,749 | ||||||||||||||
Income before income taxes | 9,824 | 10,744 | 9,699 | 11,561 | 12,385 | ||||||||||||||
Income tax expense | 2,086 | 2,213 | 2,056 | 2,535 | 2,547 | ||||||||||||||
Net income | $ | 7,738 | $ | 8,531 | $ | 7,643 | $ | 9,026 | $ | 9,838 | |||||||||
Financial ratios: | |||||||||||||||||||
Return on average assets(1) | 0.97 | % | 1.11 | % | 1.00 | % | 1.18 | % | 1.32 | % | |||||||||
Return on average assets, adjusted(1)(2)(3) | 1.09 | % | 1.19 | % | 1.13 | % | 1.18 | % | 1.32 | % | |||||||||
Return on average equity(1) | 11.41 | % | 12.79 | % | 12.21 | % | 14.42 | % | 16.27 | % | |||||||||
Return on average equity, adjusted(1)(2)(3) | 12.88 | % | 13.79 | % | 13.77 | % | 14.42 | % | 16.27 | % | |||||||||
Net interest margin(1) | 3.54 | % | 3.77 | % | 3.71 | % | 3.73 | % | 3.83 | % | |||||||||
Efficiency ratio | 68.0 | % | 67.0 | % | 68.9 | % | 63.6 | % | 61.9 | % | |||||||||
Efficiency ratio, adjusted(2)(3) | 64.6 | % | 65.0 | % | 65.6 | % | 63.6 | % | 61.9 | % | |||||||||
Per share information: | |||||||||||||||||||
Income per common share: | |||||||||||||||||||
Basic | $ | 0.74 | $ | 0.82 | $ | 0.74 | $ | 0.87 | $ | 0.95 | |||||||||
Basic, adjusted(2)(3) | 0.84 | 0.89 | 0.84 | 0.87 | 0.95 | ||||||||||||||
Diluted | 0.73 | 0.81 | 0.73 | 0.87 | 0.94 | ||||||||||||||
Diluted, adjusted(2)(3) | 0.83 | 0.88 | 0.83 | 0.87 | 0.94 | ||||||||||||||
Book value | 25.97 | 25.38 | 24.98 | 22.90 | 23.15 | ||||||||||||||
Tangible book value | 24.08 | 23.47 | 23.03 | 20.94 | 21.19 | ||||||||||||||
Cash dividends paid | 0.20 | 0.20 | 0.20 | 0.20 | 0.20 | ||||||||||||||
Average basic shares | 10,393 | 10,349 | 10,321 | 10,319 | 10,336 | ||||||||||||||
Average diluted shares | 10,553 | 10,482 | 10,419 | 10,405 | 10,421 | ||||||||||||||
(1)Annualized. | |||||||||||||||||||
(2)Ratio has been adjusted for the merger-related expenses for the three months ended June 30, 2024, March 31, 2024 and December 31, 2023. | |||||||||||||||||||
(3)Non-GAAP based financial measure. Please refer to Appendix A - Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein. | |||||||||||||||||||
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||||||||||
(continued) | |||||||||||||||||||
(In thousands) | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Service charges | $ | 1,283 | $ | 1,200 | $ | 1,198 | $ | 1,260 | $ | 1,251 | |||||||||
Interchange income | 961 | 911 | 952 | 963 | 993 | ||||||||||||||
Swap fee income | 375 | 199 | 588 | 255 | 196 | ||||||||||||||
Wealth management income | 3,312 | 3,102 | 2,945 | 2,826 | 2,822 | ||||||||||||||
Mortgage banking activities | 369 | 458 | 143 | (142 | ) | 112 | |||||||||||||
Other income | 884 | 765 | 704 | 761 | 1,786 | ||||||||||||||
Investment securities (losses) gains | (12 | ) | (5 | ) | (39 | ) | 2 | (2 | ) | ||||||||||
Total noninterest income | $ | 7,172 | $ | 6,630 | $ | 6,491 | $ | 5,925 | $ | 7,158 | |||||||||
Noninterest expenses: | |||||||||||||||||||
Salaries and employee benefits | $ | 13,195 | $ | 13,752 | $ | 12,848 | $ | 12,885 | $ | 13,054 | |||||||||
Occupancy, furniture and equipment | 2,705 | 2,639 | 2,534 | 2,460 | 2,266 | ||||||||||||||
Data processing | 1,237 | 1,265 | 1,247 | 1,248 | 1,201 | ||||||||||||||
Advertising and bank promotions | 774 | 398 | 501 | 332 | 919 | ||||||||||||||
FDIC insurance | 419 | 441 | 460 | 477 | 519 | ||||||||||||||
Professional services | 801 | 631 | 702 | 965 | 504 | ||||||||||||||
Taxes other than income | 49 | 494 | 203 | 387 | 3 | ||||||||||||||
Intangible asset amortization | 215 | 225 | 236 | 228 | 239 | ||||||||||||||
Merger-related expenses | 1,135 | 672 | 1,059 | — | — | ||||||||||||||
Other operating expenses | 2,109 | 1,952 | 2,602 | 1,465 | 2,044 | ||||||||||||||
Total noninterest expenses | $ | 22,639 | $ | 22,469 | $ | 22,392 | $ | 20,447 | $ | 20,749 | |||||||||
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||||||||||
(continued) | |||||||||||||||||||
(In thousands) | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | ||||||||||||||
Balance Sheet at quarter end: | |||||||||||||||||||
Cash and cash equivalents | $ | 132,509 | $ | 182,722 | $ | 65,161 | $ | 94,939 | $ | 76,318 | |||||||||
Restricted investments in bank stocks | 11,147 | 11,453 | 11,992 | 12,987 | 12,602 | ||||||||||||||
Securities available for sale | 529,082 | 514,909 | 513,519 | 495,162 | 508,612 | ||||||||||||||
Loans held for sale, at fair value | 1,562 | 535 | 5,816 | 6,448 | 6,450 | ||||||||||||||
Loans: | |||||||||||||||||||
Commercial real estate: | |||||||||||||||||||
Owner occupied | 371,301 | 364,280 | 373,757 | 376,350 | 366,439 | ||||||||||||||
Non-owner occupied | 710,477 | 707,871 | 694,638 | 630,514 | 626,140 | ||||||||||||||
Multi-family | 151,542 | 147,773 | 150,675 | 143,437 | 145,257 | ||||||||||||||
Non-owner occupied residential | 89,156 | 91,858 | 95,040 | 100,391 | 105,504 | ||||||||||||||
Commercial and industrial | 374,976 | 365,524 | 367,085 | 374,190 | 379,905 | ||||||||||||||
Acquisition and development: | |||||||||||||||||||
1-4 family residential construction | 32,439 | 22,277 | 24,516 | 25,642 | 20,461 | ||||||||||||||
Commercial and land development | 129,883 | 118,010 | 115,249 | 153,279 | 143,177 | ||||||||||||||
Municipal | 10,594 | 10,925 | 9,812 | 10,334 | 10,638 | ||||||||||||||
Total commercial loans | 1,870,368 | 1,828,518 | 1,830,772 | 1,814,137 | 1,797,521 | ||||||||||||||
Residential mortgage: | |||||||||||||||||||
First lien | 271,153 | 270,748 | 266,239 | 248,335 | 235,813 | ||||||||||||||
Home equity – term | 4,633 | 4,966 | 5,078 | 5,223 | 5,228 | ||||||||||||||
Home equity – lines of credit | 192,736 | 189,966 | 186,450 | 188,736 | 185,099 | ||||||||||||||
Installment and other loans | 8,713 | 8,875 | 9,774 | 10,405 | 10,756 | ||||||||||||||
Total loans | 2,347,603 | 2,303,073 | 2,298,313 | 2,266,836 | 2,234,417 | ||||||||||||||
Allowance for credit losses | (29,864 | ) | (29,165 | ) | (28,702 | ) | (28,278 | ) | (28,383 | ) | |||||||||
Net loans held-for-investment | 2,317,739 | 2,273,908 | 2,269,611 | 2,238,558 | 2,206,034 | ||||||||||||||
Goodwill | 18,724 | 18,724 | 18,724 | 18,724 | 18,724 | ||||||||||||||
Other intangible assets, net | 1,974 | 2,189 | 2,414 | 2,650 | 2,589 | ||||||||||||||
Total assets | 3,198,782 | 3,183,331 | 3,064,240 | 3,054,435 | 3,008,197 | ||||||||||||||
Total deposits | 2,702,884 | 2,695,951 | 2,558,814 | 2,546,435 | 2,522,861 | ||||||||||||||
Borrowings | 129,625 | 127,099 | 147,285 | 175,241 | 152,229 | ||||||||||||||
Subordinated notes | 32,128 | 32,111 | 32,093 | 32,076 | 32,059 | ||||||||||||||
Total shareholders' equity | 278,376 | 271,682 | 265,056 | 243,080 | 245,641 |
ORRSTOWN FINANCIAL SERVICES, INC. | |||||||||||||||||||
HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||||||||||
(continued) | |||||||||||||||||||
June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | |||||||||||||||
Capital and credit quality measures(1): | |||||||||||||||||||
Total risk-based capital: | |||||||||||||||||||
Orrstown Financial Services, Inc | 13.3 | % | 13.4 | % | 13.0 | % | 13.0 | % | 13.0 | % | |||||||||
Orrstown Bank | 13.1 | % | 13.1 | % | 12.8 | % | 12.5 | % | 12.5 | % | |||||||||
Tier 1 risk-based capital: | |||||||||||||||||||
Orrstown Financial Services, Inc | 11.1 | % | 11.2 | % | 10.8 | % | 10.6 | % | 10.5 | % | |||||||||
Orrstown Bank | 12.0 | % | 11.9 | % | 11.6 | % | 11.4 | % | 11.4 | % | |||||||||
Tier 1 common equity risk-based capital: | |||||||||||||||||||
Orrstown Financial Services, Inc | 11.1 | % | 11.2 | % | 10.8 | % | 10.6 | % | 10.5 | % | |||||||||
Orrstown Bank | 12.0 | % | 11.9 | % | 11.6 | % | 11.4 | % | 11.4 | % | |||||||||
Tier 1 leverage capital: | |||||||||||||||||||
Orrstown Financial Services, Inc | 8.9 | % | 9.0 | % | 8.9 | % | 8.7 | % | 8.6 | % | |||||||||
Orrstown Bank | 9.5 | % | 9.6 | % | 9.5 | % | 9.3 | % | 9.3 | % | |||||||||
Average equity to average assets | 8.50 | % | 8.66 | % | 8.18 | % | 8.18 | % | 8.11 | % | |||||||||
Allowance for credit losses to total loans | 1.27 | % | 1.27 | % | 1.25 | % | 1.25 | % | 1.27 | % | |||||||||
Total nonaccrual loans to total loans | 0.36 | % | 0.56 | % | 1.11 | % | 0.98 | % | 0.94 | % | |||||||||
Nonperforming assets to total assets | 0.26 | % | 0.40 | % | 0.83 | % | 0.73 | % | 0.70 | % | |||||||||
Allowance for credit losses to nonaccrual loans | 357 | % | 226 | % | 112 | % | 127 | % | 135 | % | |||||||||
Other information: | |||||||||||||||||||
Net charge-offs (recoveries) | $ | 113 | $ | (42 | ) | $ | (6 | ) | $ | 241 | $ | 380 | |||||||
Classified loans | 48,722 | 48,997 | 55,030 | 33,593 | 26,347 | ||||||||||||||
Nonperforming and other risk assets: | |||||||||||||||||||
Nonaccrual loans | 8,363 | 12,886 | 25,527 | 22,324 | 21,062 | ||||||||||||||
Other real estate owned | — | — | — | — | — | ||||||||||||||
Total nonperforming assets | 8,363 | 12,886 | 25,527 | 22,324 | 21,062 | ||||||||||||||
Financial difficulty modifications still accruing | — | — | 9 | — | — | ||||||||||||||
Loans past due 90 days or more and still accruing | 187 | 99 | 66 | 277 | 539 | ||||||||||||||
Total nonperforming and other risk assets | $ | 8,550 | $ | 12,985 | $ | 25,602 | $ | 22,601 | $ | 21,601 | |||||||||
(1) Capital ratios are estimated, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses ("CECL") to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard. |
Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations
Management believes providing certain other “non-GAAP” financial information will assist investors in their understanding of the effect on recent financial results from non-recurring charges.
As a result of acquisitions, the Company has intangible assets consisting of goodwill, core deposit and other intangible assets, which totaled
Tangible book value per common share and the impact of the merger-related expenses on net income and associated ratios, as used by the Company in this earnings release, are determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). While we believe this information is a useful supplement to GAAP based measures presented in this earnings release, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not be construed as an inference that our future results will be unaffected by similar adjustments to be determined in accordance with GAAP.
The following tables present the computation of each non-GAAP based measure:
(dollars and shares in thousands)
Tangible Book Value per Common Share | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | |||||||||||||||
Shareholders' equity (most directly comparable GAAP-based measure) | $ | 278,376 | $ | 271,682 | $ | 265,056 | $ | 243,080 | $ | 245,641 | ||||||||||
Less: Goodwill | 18,724 | 18,724 | 18,724 | 18,724 | 18,724 | |||||||||||||||
Other intangible assets | 1,974 | 2,189 | 2,414 | 2,650 | 2,589 | |||||||||||||||
Related tax effect | (415 | ) | (460 | ) | (507 | ) | (557 | ) | (544 | ) | ||||||||||
Tangible common equity (non-GAAP) | $ | 258,093 | $ | 251,229 | $ | 244,425 | $ | 222,263 | $ | 224,872 | ||||||||||
Common shares outstanding | 10,720 | 10,705 | 10,612 | 10,613 | 10,611 | |||||||||||||||
Book value per share (most directly comparable GAAP-based measure) | $ | 25.97 | $ | 25.38 | $ | 24.98 | $ | 22.90 | $ | 23.15 | ||||||||||
Intangible assets per share | 1.89 | 1.91 | 1.95 | 1.96 | 1.96 | |||||||||||||||
Tangible book value per share (non-GAAP) | $ | 24.08 | $ | 23.47 | $ | 23.03 | $ | 20.94 | $ | 21.19 | ||||||||||
(dollars and shares in thousands) | Three Months Ended | Six Months Ended | |||||||||||||||||||||
Adjusted Ratios for Merger-Related Expenses | June 30, 2024 | March 31, 2024 | December 31, 2023 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||||||
Net income (A) - most directly comparable GAAP-based measure | $ | 7,738 | $ | 8,531 | $ | 7,643 | $ | 9,838 | $ | 16,269 | $ | 18,994 | |||||||||||
Plus: Merger-related expenses (B) | 1,135 | 672 | 1,059 | — | 1,807 | — | |||||||||||||||||
Less: Related tax effect (C) | (139 | ) | (1 | ) | (79 | ) | — | (140 | ) | — | |||||||||||||
Adjusted net income (D=A+B-C) - Non-GAAP | $ | 8,734 | $ | 9,202 | $ | 8,623 | $ | 9,838 | $ | 17,936 | $ | 18,994 | |||||||||||
Average assets (E) | $ | 3,211,124 | $ | 3,098,772 | $ | 3,037,824 | $ | 2,989,415 | $ | 3,154,948 | $ | 2,961,427 | |||||||||||
Return on average assets (= A / E) - most directly comparable GAAP-based measure(1) | 0.97 | % | 1.11 | % | 1.00 | % | 1.32 | % | 1.04 | % | 1.29 | % | |||||||||||
Return on average assets, adjusted (= D / E) - Non-GAAP(1) | 1.09 | % | 1.19 | % | 1.13 | % | 1.32 | % | 1.14 | % | 1.29 | % | |||||||||||
Average equity (F) | $ | 272,788 | $ | 268,289 | $ | 248,442 | $ | 242,527 | $ | 270,538 | $ | 238,233 | |||||||||||
Return on average equity (= A / F) - most directly comparable GAAP-based measure(1) | 11.41 | % | 12.79 | % | 12.21 | % | 16.27 | % | 12.09 | % | 16.08 | % | |||||||||||
Return on average equity, adjusted (= D / F) - Non-GAAP(1) | 12.88 | % | 13.79 | % | 13.77 | % | 16.27 | % | 13.33 | % | 16.08 | % | |||||||||||
Weighted average shares - basic (G) - most directly comparable GAAP-based measure | 10,393 | 10,349 | 10,321 | 10,336 | 10,371 | 10,360 | |||||||||||||||||
Basic earnings per share (= A / G) - most directly comparable GAAP-based measure | $ | 0.74 | $ | 0.82 | $ | 0.74 | $ | 0.95 | $ | 1.57 | $ | 1.83 | |||||||||||
Basic earnings per share, adjusted (= D / G) - Non-GAAP | $ | 0.84 | $ | 0.89 | $ | 0.84 | $ | 0.95 | $ | 1.73 | $ | 1.83 | |||||||||||
Weighted average shares - diluted (H) - most directly comparable GAAP-based measure | 10,553 | 10,482 | 10,419 | 10,421 | 10,517 | 10,458 | |||||||||||||||||
Diluted earnings per share (= A / H) - most directly comparable GAAP-based measure | $ | 0.73 | $ | 0.81 | $ | 0.73 | $ | 0.94 | $ | 1.55 | $ | 1.82 | |||||||||||
Diluted earnings per share, adjusted (= D / H) - Non-GAAP | $ | 0.83 | $ | 0.88 | $ | 0.83 | $ | 0.94 | $ | 1.71 | $ | 1.82 | |||||||||||
Noninterest expense (I) - most directly comparable GAAP-based measure | $ | 22,639 | $ | 22,469 | $ | 22,392 | $ | 20,749 | $ | 45,108 | $ | 41,004 | |||||||||||
Less: Merger-related expenses (B) | (1,135 | ) | (672 | ) | (1,059 | ) | — | (1,807 | ) | — | |||||||||||||
Adjusted noninterest expense (J = I - B) - Non-GAAP | $ | 21,504 | $ | 21,797 | $ | 21,333 | $ | 20,749 | $ | 43,301 | $ | 41,004 | |||||||||||
continued | |||||||||||||||||||||||
(1) Annualized |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2024 | March 31, 2024 | December 31, 2023 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||
Net interest income (K) | $ | 26,103 | $ | 26,881 | $ | 26,018 | $ | 26,375 | $ | 52,984 | $ | 52,669 | |||||||||||
Noninterest income (L) | 7,172 | 6,630 | 6,491 | 7,158 | 13,802 | 13,236 | |||||||||||||||||
Total operating income (M = K + L) | $ | 33,275 | $ | 33,511 | $ | 32,509 | $ | 33,533 | $ | 66,786 | $ | 65,905 | |||||||||||
Efficiency ratio (= I / M) - most directly comparable GAAP-based measure | 68.0 | % | 67.0 | % | 68.9 | % | 61.9 | % | 67.5 | % | 62.2 | % | |||||||||||
Efficiency ratio, adjusted (= J / M) - Non-GAAP | 64.6 | % | 65.0 | % | 65.6 | % | 61.9 | % | 64.8 | % | 62.2 | % | |||||||||||
(1) Annualized |
Appendix B- Investment Portfolio Concentrations
The following table summarizes the credit ratings and collateral associated with the Company's investment security portfolio, excluding equity securities, at June 30, 2024:
(dollars in thousands)
Sector | Portfolio Mix | Amortized Book | Fair Value | Credit Enhancement | AAA | AA | A | BBB | NR | Collateral / Guarantee Type | ||||||||||||||||||
Unsecured ABS | 1 | % | $ | 3,330 | $ | 3,022 | 26 | % | — | % | — | % | — | % | — | % | 100 | % | Unsecured Consumer Debt | |||||||||
Student Loan ABS | 1 | 4,662 | 4,558 | 27 | — | — | — | — | 100 | Seasoned Student Loans | ||||||||||||||||||
Federal Family Education Loan ABS | 16 | 89,830 | 89,516 | 10 | 7 | 80 | — | 13 | — | Federal Family Education Loan(1) | ||||||||||||||||||
PACE Loan ABS | — | 2,231 | 1,945 | 6 | 100 | — | — | — | — | PACE Loans(2) | ||||||||||||||||||
Non-Agency CMBS | 3 | 14,180 | 14,185 | 25 | — | — | — | — | 100 | |||||||||||||||||||
Non-Agency RMBS | 3 | 17,195 | 14,201 | 16 | 100 | — | — | — | — | Reverse Mortgages(3) | ||||||||||||||||||
Municipal - General Obligation | 18 | 102,548 | 93,339 | 10 | 83 | 7 | — | — | ||||||||||||||||||||
Municipal - Revenue | 21 | 118,856 | 107,107 | — | 82 | 12 | — | 6 | ||||||||||||||||||||
SBA ReRemic(5) | — | 2,662 | 2,639 | — | 100 | — | — | — | SBA Guarantee(4) | |||||||||||||||||||
Small Business Administration | 1 | 7,222 | 7,662 | — | 100 | — | — | — | SBA Guarantee(4) | |||||||||||||||||||
Agency MBS | 32 | 183,546 | 173,086 | — | 100 | — | — | — | Residential Mortgages(4) | |||||||||||||||||||
U.S. Treasury securities | 4 | 20,050 | 17,713 | — | 100 | — | — | — | U.S. Government Guarantee(4) | |||||||||||||||||||
100 | % | $ | 566,312 | $ | 528,973 | 6 | % | 83 | % | 4 | % | 2 | % | 5 | % | |||||||||||||
(1) | ||||||||||||||||||||||||||||
(2)PACE acronym represents Property Assessed Clean Energy loans | ||||||||||||||||||||||||||||
(3)Non-agency reverse mortgages with current structural credit enhancements | ||||||||||||||||||||||||||||
(4)Guaranteed by U.S. government or U.S. government agencies | ||||||||||||||||||||||||||||
(5)SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits | ||||||||||||||||||||||||||||
Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor's, Moody's, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor's rates U.S. government obligations at AA+. |
About the Company
With
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company's management with respect to, among other things, future events and the Company's financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates, predictions or projections about events or the Company's industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company's control. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, successful merger and acquisition activity and cost savings initiatives and continued reductions in risk assets or mitigation of losses in the future. Factors which could cause the actual results of the Company's operations to differ materially from expectations include, but are not limited to: general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; ineffectiveness of the Company's strategic growth plan due to changes in current or future market conditions; changes in interest rates; the diversion of management's attention from ongoing business operations and opportunities; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in laws and regulations; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with litigation and legal proceedings; the possibility that the anticipated benefits of the merger with Codorus (the “Merger”) are not realized when expected or at all; the possibility that the Merger may be more expensive to complete than anticipated; the possibility that revenues following the Merger may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the Merger; the ability to complete the integration of the two companies successfully; the dilution caused by the Company’s issuance of additional shares of its capital stock in connection with the Merger; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2023 under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in subsequent filings made with the Securities and Exchange Commission.
The foregoing list of factors is not exhaustive. If one or more events related to these or other risks or uncertainties materializes, or if the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company disclaims any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company's behalf may issue.
The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change. Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only and are not forecasts and may not reflect actual results.
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